‘Cryptos a high-risk bet’
A senior personal finance analyst has discussed how the Cryptocurrency sell off is a ‘tough pill to swallow for some’, and how it highlights the importance of nuanced conversions about risk and reward.
Myron Jobson, Senior Personal Finance Analyst, interactive investor, says: “The crypto sell off has been driven by a culmination of long and short term factors including worries about regulation, security breaches as well as pressures buffeting traditional markets such as geopolitical uncertainty and US interest rate hikes.
“The spat of crypto scams has also undermined confidence in the asset. Recent news of infamous ‘Cryptoqueen’ Ruja Ignatova being added to Europol’s most wanted list, for convincing people she invented a cryptocurrency to rival Bitcoin before disappearing with billions of their cash, reinforces the crypto market’s Wild West reputation.
“Whatever the reason, the crash is a tough pill to swallow for those who made their very first investment in cryptos. Our research* found that 45% of young adults aged between 18 and 29 have made crypto their first investment of choice, with an alarming number funding this through a cocktail of credit cards, student loan, and other loans. The worry is many have been hit with a double whammy of investment loss and a deeper plunge into debt. The debt issue is made worse with rising interest rates.
“It is hard to say whether the crypto sell off is indicative of a long-term decline. Crypto evangelists would argue that we’ve been here before and cryptos not only recovered but skyrocketed in value to hit record highs. But the market environment now is very different – and the jury is out.”
